Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 17992

IMPLEMENTATION COMPLETION REPORT

BOLIVIA

SECOND PUBLIC FINANCIAL MANAGEMENT OPERATION

(Credit No. 2279-0 BO)

June 5, 1998

Finance, Private Sector & Infrastructure UnitCountry Department for Bolivia, Peru and ParaguayLatin American and the Caribbean Regional Office

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

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IMPLEMENTATION COMPLETION REPORT

BOLIVIA

SECOND PUBLIC FINANCIAL MANAGEMENT OPERATION

(Credit 2279-0 BO)

CURRENCY EQUIVALENTS(June 1, 1998)

Currency Unit: Boliviano (Bs.)

1US$ = Bs. 5.50

Fiscal Year of Borrower

January 1 - December 31

Vice President. Mr. Shahid Javed BurkiCountry Director: Ms. Isabel GuerreroSector Director: Mr. Dainy LeipzigerTask Team Leader: Mr. John Pollner

FOR OFFICIAL USE ONLY

ABBREVIATIONS AND ACRONYMS

CENCAP National Training Center (Centro Nacional de Capacitaci6n)CGR Comptroller General of the Republic

(Contraloria General de la Repuiblica)COMTECO Technical Committee (Comite Tecnico)CONSAFCO National Council for the SAFCO System

(Consejo Nacional para el Sistema SAFCO)ENTEL National Telecommunications Corporation

(Empresa Nacional de Telecomunicaciones)GAO General Accounting OfficeGOB Government of BoliviaICR Implementation Completion ReportIDA International Development AssociationIFMS Integrated Financial Management SystemILACO Implementation of the Law of Administration and Control

(Implantaci6n de la Ley de Administraci6n y Control)IMF International Monetary FundIDB Inter-American Development BankMOF Ministry of Finance (Ministerio de Hacienda)PFMO Public Financial Management OperationRDC Regional Development CorporationSAC Structural Adjustment CreditSAR Staff Appraisal ReportSAFCO Financial Administration and Control System

(Sistema de Administraci6n Financiera y Control)SAFCO Law Law of Financial Administration and Control SystemsSICOPRE Budgetary Control System (Sistema de Control Presupuestario)SICON National Control System (Sistema de Control Nacional)SIEF Economic and Financial Information System

(Sistema de Informaci6n Economica y Financiera)SIIF Integrated Financial Information System

(Sistema Integrado de Informaci6n Financiera)TGN The National Treasury (Tesoreria General de la Naci6n)UNDP United Nations Development ProgramUSAID United States Agency for International Development

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

TABLE OF CONTENTS

Preface ............... i

Evaluation Summary ............... ii

A. Statement/Evaluation of Objectives .................................................. ,. 1

B. Achievement of Objectives ................................................. .. 2

C. Implementation Record and Major Factors Affecting the Project .5

D. Project Sustainability .6

E. IDA Performance .7

F. Borrower Performance .8

G. Assessment of Outcome .8

H. Future Operation .9

I. Key Lessons Learned .9

PART II: STATISTICAL ANNEXES

Table 1. Summary of AssessmentsTable 2. Related IDA CreditsTable 3. Project TimetableTable 4. Loan/Credit DisbursementsTable 5. Key Indicators for Project ImplementationTable 6. Key Indicators for Project OperationTable 7. Studies Included in the ProjectTable 8A. Project CostsTable 8B. Project FinancingTable 9. Economic Costs and BenefitsTable 10. Status of Legal CovenantsTable 11. Compliance with Operational Manual StatementsTable 12. IDA Resources: Staff InputsTable 13. IDA Resources: Missions

Appendix A. Borrower's Evaluation

IMPLEMENTATION COMPLETION REPORT

BOLIVIA

SECOND PUBLIC FINANCIAL MANAGEMENT OPERATIONCredit 2279-0 BO

Preface

1. This is the Implementation Completion Report (ICR) for the Second Public Financial ManagementProject in Bolivia, for which Credit 2279-BO in the amount of SDR 8.50 million (equivalent to US$ 11.30million), was approved on June 26, 1991 and made effective on December 16, 1991.

2. The credit was closed on December 31, 1997. As of December 31, 1997, 95% of the credit wasdisbursed. A final withdrawal of SDR 50,985.69 (US$ 69,151.89) was pending and disbursed on January29, 1998. The unused balance of SDR 744,313.83 will be canceJed.

3. The ICR was prepared by John Pollner (Task Manager, LCSFP) and Carmen Machicado(Financial Consultant, LCSPR). Sati Achath (PSM Consultant) also contributed to the report and in thepreparation of the statistical tables. The ICR was reviewed by Susan Goldmark (Sector Leader), OrvilleGrimes (LCODR) and Maria Victoria Lister (LCSFP). Preparation of this ICR was begun during the finalsupervision/ICR mission which took place in mid-December of 1997. The ICR is based on materials in theproject file, interviews with IDA staff involved in project preparation and implementation, interviews withthe Borrower's staff in Bolivia, and additional information requested of the Borrower to facilitate IDA'sreview of the project. The Project Executing Agency, ILACO, prepared the Project Review from theBorrower's perspective (Appendix A). Comments on the draft ICR received from ILACO have beenlargely incorporated into this final version.

4. The Aide Memoire for this ICR is not included in this report since it contained elements of otherproject supervision matters as well as a discussion of the proposed design for the follow-up project. Giventhat some of these items would not appear appropriate in the context of the ICR report presentation, andgiven the brevity of the ICR discussion in that Aide Memoire, it is therefore not included as an Appendixbut is available in the project files as necessary.

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IMPLEMENTATION COMPLETION REPORT

BOLIVIA

SECOND PUBLIC FINANCIAL MANAGEMENT OPERATIONCredit 2279-BO

Evaluation Summary

Introduction

1. Following the hyperinflationary period in the early 1980s and the subsequent economic policyreform programs adopted by the Government in late 1985, Bolivia undertook to improve public sectoradministration via the establishment of the SAFCO Law to create a modem normative regulatoryframework for more effective public financial management. Bolivia was one of the pioneering countries toset up a legal public financial management framework for promoting accountability, and soon afterwards,other Latin American countries were developing similar approaches which led to a number of governmentalfinancial management projects in the region. To date, the legal model and the scope of the SAFCO Law isstill considered a model framework given its coverage of all financial functions within the public sector, andits presentation of public accountability principles without overspecification of procedures. Thedevelopment of the Bolivia SAFCO Law, passed by the Congress in July of 1990, was supported by thePublic Financial Management Operation I (PFMO I), the predecessor to the present project. That project,with the new public management framework, was one of the key instruments for the Government of Boliviato revamp the country's public financial management systems in the late 1980s. The main objectives ofthat project were to (i) improve financial administration and control of ministries and public entities; (ii)enable the implementation of tax reforms and improve tax administration; and (iii) improve the nationalbanking system, strengthen the Central Bank and restructure the main development banks.

2. That project was successful on many counts. For example, the Emergency Program under theFinancial Administration and Control component greatly enhanced the treasury's ability to manage publicfinances by providing timely income, expenditure and cash flow data. The Ministry of Finance (MOF) andthe Office of the Controller General of the Republic (CGR) were re-organized and the office of theAccountant General was created. Norms and procedures were developed for budgeting, budget execution,public credit, accounting, internal control and auditing. In Tax administration, the Internal RevenueDepartment was reorganized and domestic tax collections increased from about 1% of GDP in 1984 to7.8% in 1992. Under the Banking System Reform component, the Central Bank was reorganized, its coredivisions were strengthened and accounting systems were computerized.

3. However, realizing that there were many more constraints to overcome, the Government of Boliviarequested IDA for a follow-up operation to strengthen the financial administration and control proceduresintroduced under PMFO I. Whereas PFMO I had developed initial financial management, control, andoversight capacity of the MOF and the CGR, the Second Public Financial Management Operation (PFMOII) was to concentrate on other public sector entities at the national and local levels, continuing the effort toprovide the Government with management information systems critical to execute its budget and investmentpolicy, and take appropriate corrective measures regarding redeployment of funds towards priorityprograms. The project was also to help the CGR implement accountability measures vital to the oversightand transparent management of public resources.

Project Objectives

4. The main objectives of the project were to: (a) institutionalize budgeting, accounting, cashmanagement and auditing procedures at various levels of government; (b) enhance the institutional capacity

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and skills both at the central and regional government levels to implement new procedures and publicfinancial management systems; (c) provide the government with ex-post control functions vital to theenforcement of accountability for results in the public sector; and (d) implement final norms andregulations consistent with the SAFCO Law, to cover all public financial and administrative functionscovering budgeting, accounting, cash programming, debt management, personnel, procurement,organizational management, and operations programming.

5. The financial management systems and regulatory norm components of the project were executedby the Ministry of Finance, while the audit/control and training components fell under the mandate of theComptroller General. The project was intended to provide the institutional support for ihe macroeconomicand public sector reforms being undertaken by the Govemment by putting in place upgraded andstandardized mechanisms for financial administration and timely tracking of fiscal resources. In thisregard, emphasis was given not only to the development and implementation of modemized procedures forthe govermment budget, treasury, accounting, and auditing functions, but also utilizing appropnateinformation technology to ensure that such procedures were structured in an integrated fashion to allowflexibility in meeting future public resource management needs, and their sustainability. This approachproved essential given governmental reforms which subsequently took place during the execution of theproject, and which resulted in a major restructuring and decentralization of fiscal resources managedthroughout the public sector.

Implementation Experience and Results

6. The project was successful in the achievement of most of its objectives. The eight regulatorynorms covering financial management and public administration had been approved and issued by project-end, a working integrated financial management system was in place and able to monitor budgetexpenditures in the central government sector, and 70% of budget resources managed in the decentralizedsectors (decentralized agencies and municipalities). The Comptroller General's office greatly increased itstechnical and institutional capacity in both financial and operational audit areas, and by project-end, wascertified by most multilateral institutions as a qualified agency to conduct reliable audits of projectsfinanced by donors and international institutions.

7. The project essentially met its critical mass of targets during the last two years of execution. Initialsetbacks occurred due to frequent changes in the political directorate and in the Under Secretaries withinthe Finance Ministry (MOF), although the Comptroller General's component progressed as planned and didnot suffer delays. However in the MOF, besides the frequent rotation at the executive levels, theappointment of technical coordinators to lead the project on the government side, was sub-optimal initially,and required IDA's intervention to ensure that the last project director was sufficiently qualified bothtechnically and in terms of team leadership abilities, to complete the targets envisioned under theimplementation plan. While this was accomplished, and the integrated financial management system(IFMS) met most of the required functional specifications by project-end, the on-line connection of theIFMS to all central government agencies was only partially accomplished due to (i) the high cost oftelecommunications services for this purpose, and (ii) a change in government which put the process onhold pending the new government's evaluation and reception of the system.

8. The institutional capacity of the government in sustaining the project's accomplishments wasmixed. To a large extent, the project financed the development and skills training in modernized financialmanagement, although, to ensure efficient project execution, professional skills were focused under theproject unit itself given the sub-optimal experience of having diffused project 'technicians' throughout lineagencies during the initial stages of the project. This resulted in the development of a highly qualifiedgroup of financial management and informatics specialists, though the integration of these skills intopermanently budgeted positions in the public sector remains incomiplete, and poses some risks in terms ofsustaining the technical capacity to properly maintain the IFMS system. Given the project's achievements,

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and the need to disseminate these to the newly decentralized public sector, IDA is continuing its support ofthe government's financial management development program, which will seek to emphasize long-termsustainability, institutionalization, and permanence of funding for such activities.

Summary of Findings, Future Operations, and Key Lessons Learned

9. The project outcome is satisfactory. It achieved most of its objectives in terms ofinstitutionalization of financial management and audit systems, and even exceeded some (as in the start-upimplementation of IFMS systems in the newly formed prefecture governments), though on some counts itfell short, particularly in completing the on-line connection of the IFMS to all central government agencies,and the integrated usage of the system in the budget and cash management areas. These two functionalareas still depend to some extent on complementary systems to cover off-budget transactions which aredifficult to capture on the project's IFMS system, reflecting more of a policy rather than a technicalshortfall. This also points to a greater need for policy reform, particularly in the public budgeting area, toreinforce the institutionalization of modem mechanisms for government financial management, and movetowards greater automation of financial control procedures. This would prevent political discretion in thedisbursement of resources once they have been legally approved in the national budget.

10. Executive support for the project's targets (i.e.: from the Minister and Secretary of Finance) needsto be further emphasized with government authorities to ensure a coordinated approach by the various useragencies and vice-ministries. Lack of leadership in this sense can easily lead to fragmentation of theintegrated financial management strategy and the desire for units to develop their own independent systems.Coupled with this, however, additional consultation and a 'user-service' approach by the project's technicalleadership is crucial, to ensure ownership, acceptance, and proper specification of the technical parametersrequired by the user organizations. While policy preferences can inevitably cause divergences of opinion inthe design of such systems, greater success can be achieved by combining high level executive support witha broader degree of user consultation on the part of the technical project leadership. The latter should alsotake into account existing 'de facto' processes (such as off-budget payments), which, even if incohsistentwith a modernized IFMS system design, need to be incorporated in an interim fashion while the users areweaned from such practices and begin adopting more disciplined procedures for managing publicresources. The government audit function can also be directed to monitor this process to ensure adherenceto the principles of the SAFCO Law.

11. Continued IDA support in the form of an upcoming project will strengthen the financialmanagement capabilities of prefectures, cities, and municipal governments, while emphasizing the keyareas requiring more firming up in the central govemment sector. This will include, inter alia, (a) anevaluation of current budget policies and procedures with a view to harmonizing these within the context ofIFMS development and SAFCO regulations, (b) an evaluation of the information technology platformsused, to assure the best deployment of technology both for quick user adaptation and implementation ofautomated financial controls, (c) strict monitoring of the technical qualifications of the project's leadershipand staff to avoid "down time" and resource wastage on account of frequent tumover in staff as well as inexecutive posts, and (d) continuous partnership building among user agencies, stakeholders, and theexecutive level of govenmment, to guarantee a collective commitment to a coordinated and integratedfinancial management framework. This would promote coaching by the political leadership to ensuremanagement/user participation in this process, and avoid the risks of sectarianism and segregation ofsystems to execute related financial management functions.

12. The main lessons to be leamed from this project, therefore, are:

* The importance of instilling project ownership at the executive levels in the implementing agencies.

* Maintaining simpler project designs focusing on concrete and monitorable implementation targets.

Enforcing strict covenant compliance to ensure no compromises on project technical leadership.

Supporting financial process reforms with policy actions geared towards instilling accountability.

Ensuring continual integration and coordination of government users in the financial systemsdevelopment effort, to ensure acceptance and avoid independent development of sub-systems.

Recognizing "de facto" traditional business processes and integrating them into modernizedfinancial management systems gradually, rather than forcing new procedures on reluctant users.

Implementing parallel policy reform programs, particularly in the area of budget practices andauditing, to ensure that once modernized systems are implemented, they can be used to enforceaccountability without being overridden by ad hoc political mandates.

Exploiting the information-technology features of security and computerization, in order tooptimize consistent financial management procedures, and automate previously discretionarycontrols.

IMPLEMENTATION COMPLETION REPORT

BOLIVIA

SECOND PUBLIC FINANCIAL MANAGEMENT OPERATIONCredit 2279-BO

PART I: PROJECT IMPLEMENTATION ASSESSMENT

A. STATEMENT/EVALUATION OF OBJECTIVES

1. Efforts to develop the legal framework for financial control and auditing of public entities inBolivia began with the formulation of the SAFCO Law, supported by the PFMO I project. Under this firstproject, success was also achieved in the initial financial management, control and oversight capacities ofthe Ministry of Finance and the Comptroller General's Office. The purpose of the follow-up operation wasto facilitate implementation of the SAFCO Law, institutionalize procedures and systems developed underthe first project, and enforce public sector accountability.

2. Furthermore, Bolivia faced severe constraints on its resources, allowing it little room for deviationfrom its macro stabilization program, and stronger public financial management was essential inmaintaining control over public expenditures. Thus, the objectives of the follow-up project were an integralpart of IDA's assistance strategy to Bolivia, which was aimed primarily at supporting financialmanagement reforms through broad-based institutional efforts, and modernization of systems andprocedures to improve fiscal management in the longer term.

3. The main objectives of the Second Public Financial Management Operation (PFMO II) therefore,were to: (a) institutionalize budgeting, accounting, cash management and auditing procedures at variouslevels of government; (b) enhance the institutional capacity and skills both at the central and regionalgovernment levels to implement new procedures and public management systems; (c) provide thegovernment with ex-post control functions vital to the enforcement of accountability for results in thepublic sector; and (d) implement final norms and regulations consistent with the SAFCO Law, covering allpublic financial functions and administrative norms in the areas of personnel, procurement, organizationalmanagement, and operations programming.

4. The two main agencies, the Ministry of Finance (MOF) and the Office of the Comptroller General(CGR) were the selected implementing agencies for the project. The project consisted of three maincomponents: (a) financial management and control to create and modernize budgeting, accounting, cashmanagement and government auditing norms and procedures at the central administration level includingdissemination of these at other public sector levels (50 % of total project costs of which the governmentauditing sub-component accounted for 26% of costs ); (b) development of standards and regulations toreview and draft regulations called for by the SAFCO Law in the areas of operations programming,personnel management, procurement and administration of goods and services, and the rationalization ofthe non-financial public sector (2% of project costs); and (c) training of existing and future financialmanagement specialists and their managers, and institutional support (40% of project costs). ProjectAdministration accounted for 8% of total project costs. Of these costs, counterpart financing of US$ 11.0million (49% of project budgeted costs) to be funded by USAID were partially withdrawn in 1995. Actualcontributions by USAID amounted to US$ 6.0 million; the remainder of counterpart funds were providedby the government. Of the USAID financing, approximately US$ 1.0 million was provided for the designand implementation of a two year Master's Degree in Public Auditing and Public Sector Management.

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5. The public sector structure at the time of the design of the project was composed of the centralgovernment (central administration and decentralized agencies), territorial governments (regionaldevelopment corporations, departmental prefectures and municipalities) and social security institutions.Under this structure the regulatory and informatic systems were to be implemented gradually starting withthe central administration and then replicating and modifying the systems throughout selected representativeentities within the decentralized sector, regional development corporations and municipalities.

6. Project objectives were upheld as desirable goals by every government in turn. Meeting some ofthe objectives, however, required a level of integration by higher level officials at the Ministry of Financenot easily achievable without a strong leadership from key players within the government apparatus. Thehigh level council (CONSAFCO), which was created for purposes of monitoring progress and reviewingthe first Financial Management Operation, was reorganized and essentially dismantled as a coordinatingbody for the project halfway into this second operation, due to the impracticality of periodically conveningthe council. In the absence of this leadership, the role of coordination was transferred solely to the ProjectUnit, placed as and advisory body in the office of the Minister of Finance, and a technical committee(COMTECO) consisting of public officials and consultants of the project. The technical leadershipexercised by the Project Director and the level of coordination achieved within the Ministry of Financebecame crucial for project execution.

7. The government audit sub-component executed by the CCrR (an independent entity in thegovernment structure) was successfully progressing on schedule with its targets even while it wassomewhat hampered by its dependence on the Ministry of Finance for project management. The solution,following the project's mid-term review, was to separate project rnanagement functions pertaining to theproject components under the Ministry of Finance and the Comptroller General respectively. Based on thisarrangement each agency was assigned its own autonomous budget and could contract services andpurchase goods separately while the original project unit continued to consolidate the financial andaccounting data of both agencies.

8. Targets for implementation of normative regulations and financial information systems weremodified during the course of the project to adjust overly optimistic expectations as to the pace and ease ofimplementation of these systems and to take into account the major structural changes in the public sectorstructure starting in 19941. The latter had an important impact on financial management systems, for itchanged executive accountability and the apportionment of the nation's finances which were to bemanaged by different levels of government in the public sector.

B. ACHIEVEMENT OF OBJECTIVES

9. As indicated in Table 1 in the Statistical Annex, project objectives were satisfactorily achieved.The project which closed on December 31, 1997, was implemented within the estimated budgets(equivalent to $26.15 million -- this included dollar exchange fluctuations against the SDR, and additionalmatching counterpart funding) and in reasonable time periods. This was despite a one year extension in theclosing date, justified based on the comprehensive restructuring of the public sector, and empowerment ofthe regional and municipal governments during the course of the project.

10. Financial Management and Control . The project supported the increased automatization,standardization and transparency of various systems, guided by the regulatory norms and procedures forfinancial management in the public sector. This included the budget, accounting, cash management,treasury, and audit functions.

The structural changes consisted of (i) The privatization and capitalization of a number of large enterprises and other publicentities; (ii) The Popular Participation Law (which increased the number of municipalities from 9 to 311) and modified therevenue sharing allocations & transfers from the central government, and (iii) The Decentralization Law which established anew 'deconcentrated' govemnmental organization structure at the level of the regional Departmental Prefectures.

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11. A program based system for budget formulation and consolidation (LEXUS) was developed andimplemented in the central administration. In parallel, the financial information systems developed underthe first project were replaced, integrated and redesigned under an open architecture informatics system.The financial management system (IFMS) developed, allowed the on-line integration of the treasury,budgeting, and accounting functions of the Ministry of Finance. Since the Treasury controls allexpenditures by the central government, the IFMS is able to provide on daily basis about 70% of theNational Budget2 and 90% of budget execution of the central government on an accrual accounting basis.Basic financial information is available for budget monitoring purposes including reallocation of budgetenvelopes as periodically modified during the year. Combined overall public sector information is alsoavailable on a monthly basis. A metropolitan network for connecting all central government agencies to thedata base at the Ministry of Finance was developed and piloted successfully in six of the twenty centralagencies. Completion of the central government financial management network connection was intended bythe end of the project -- while the capability is now in place, only six of the twenty targeted agencies arecurrently connected "on-line".

12. Capabilities have been developed for electronically transferring budget payments through thebanking system and receiving on-line voucher payment requests from the agencies. However, theimplementation of these modules is dependent on modification of current laws which do not contemplateelectronic payments or vouchers as "legal" transaction instruments. Some government reluctance appearsto exist with respect to replacing all manual mechanisms since that would imply reductions in staff andauthorities' discretion in checking, reviewing and signing off on budgetary financial transactions.

13. The project also envisioned the implementation of a prototype financial information systemdesigned for 15 representative decentralized level agencies that could be integrated into the central database and replicated throughout the decentralized entities. For the purpose of retrieving budget andaccounting information of the decentralized agencies, at least 2 different systems were developed andimplemented in about 180 agencies with varying degrees of success (SICOPRE, SICON and SIEF). Thecentral government SIIF system, however, eventually became the standard, and efforts had begun toupgrade/replace the other systems with the SIIF. With the enactment of the AdministrativeDecentralization and Popular Participation Laws, however, the restructuring of the public sector beginningin 1994 significantly changed the implementation indicators envisioned at the onset, particularly with theabolition of the decentralized regional development corporations and other decentralized entities which wereabsorbed into the new prefectural regional governments. The Accounting Directorate and ProjectManagement thus opted for supporting the adaptation of the central government IFMS (SIIF) system in thenewly established regional prefectural governments, as the best instrument for reaching the intendedobjectives of the project, given the institutional consolidation which had taken place. At the time of theclosing of the project, six of the nine prefectures had started to adopt the central IFMS for theirjurisdictions.

14. One of the important objectives of this component was to eliminate the "Emergency Program".This program had been created in 1988 to generate timely and reliable financial data on the non-financialpublic sector (including central administration, important decentralized institutions, state enterprises andmunicipalities). The consolidated reports produced by the Program on the cash flow of these entitiesbecame an important tool for managing the Treasury's resources and controlling public expenditures. Thefact that this Unit (now integrated under the Vice-Ministry of Treasury) still exists ten years later highlightsthe fact that the IFMS system has not been able to fully replace in timeliness or reliability the totalinformation produced by this Unit. Although, the Emergency Program now gathers most of the data on thecentral administration from the IFMS data base, it supports its own system (SIEF). Consultants andanalysts are used for retrieving cash flow data on the decentralized entities and for consolidating operations"below the line" not currently captured in the IFMS system. This process is still maintained because from

2 Based on the 1997 National Budget.

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a data processing standpoint, it is easier to operate as it does not necessitate strict accounting norms, andonly depends on cash flow recording. However, it is heavily dependent on a permanent presence andmonitoring capability of consultants assigned to each agency (these consultants are not IDA financed).

15. Nevertheless the implementation of a uniform information system has significantly increasedefficiencies and reduced the amount of discrepancies that existed before the systematization of procedures.Although parallel systems still endure, there is a general acceptance towards pushing for the total availableinformation finding its way to a common data base where it can be available to decision makers forconsolidation, consultation, managerial analysis and financial control. A periodic bulletin which publishedpublic financial accounting information based on the information produced by the system was disseminatedby the Accounting Office during a short period. However, the publication of this bulletin was aimed atestablishing transparency in financial reporting as sought by the project but, unfortunately, politicalpressures were successful in discontinuing its publication.

16. The Comptroller General's (CGR) Audit sub-component showed high quality results in thedevelopment of auditing capacity and institution-building. With the deployment of qualified internationalaudit consultants, the CGR upgraded its audit skills to include, besides the traditional financial audits ofpublic entities, operational audits of public investments including the evaluation of public works, andenvironmental audits covering solid waste disposal, sewerage, protected areas, and special program auditssuch as capitalization and privatization. The project's support for institutional strengthening in the CGRhelped create a new unit within the agency to establish state of the art procedures in audit systems(including internal and regional electronic networks) and expand its coverage of the public sector (includinga number of small municipalities). A newly created unit for follow up of audits, for example, has provideda valuable ex-post review function for financial management systems in the municipal sectors, thusensuring that accounting and budget reporting standards and controls permeate all levels of the Bolivianpublic sector. The Comptroller General now ranks among one of the best in Latin America and it is one ofthe few national audit institutions in the third world known to be professionally reviewing the quality ofpublic agency/enterprise audits performed by private sector auditing firms contracted by the government.By maintaining its independence (despite two court challenges against its mandate to audit municipalbodies), the CGR has now enforced a regular cycle of audits of all public sector bodies. Additional legalprotections will need to be put in place to allow the CGR to more candidly report major misuses of publicfunds, particularly in public agencies/bodies controlled by stronger political interests.

17. Financial/Administrative Regulatorv Norms . The basic norms for the eight financial andadministrative systems developed under the project and established under the SAFCO Law were draftedand officially approved. These norms which were finalized under the project covered: accounting,budgeting, treasury, debt management, operations programming, procurement, personnel, and organization.The development and approval of norms though, was unjustifiably slow. Moreover, the decentralizationprocess required that the norms that had been drafted be revised to reflect differences in operationalprocedures, and the size and scope of authority granted by the law to decentralized agencies. Since manyof the basic norms were not drafted or approved until the last year of the project, much yet remains to bedone in terms of disseminating and implementing the norms within the government entities. Without thenorms and specific regulations in place, the implementation of the SAFCO Law has only been partiallyeffective. These norms will provide guidance to all public sector entities in organizing their financialmanagement functions, and will be further promulgated at the central, regional, and municipal levels, underthe successor project.

18. Training. The CENCAP training center offered training courses to 7,881 public sectorparticipants in 1995 and an additional 7,600 as of end-July 1996, as well as a number of training coursesfor trainers. While the center performed a useful role in training public sector employees nationwide inSAFCO Law requirements as well as budgetary, accounting, auditing and other procedures required underthe Law, insufficient training was given to actual operation and applied usage of IFMS systems,

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particularly those being developed under the project in the MOF. Among the implementation obstaclesencountered under this component were as mentioned above, the delays in the approval of the basicadministration and financial control systems of the SAFCO Law, and the constant tumover of publicofficials.

19. This component also supported, in conjunction with USAID, a two year Masters Degree Programin Auditing and Public Finances established with assistance from the Harvard Institute for InternationalDevelopment. The Program got off to a very slow start. Moreover, neither the focus nor the marketing ofthe program was sufficiently oriented at the public financial administration component of the curriculum,prompting the CGR to reevaluate further support for this program. Credit funds of $0.4 million weredisbursed toward this activity.

C. IMPLEMENTATION REcoRD AND MAJOR FACTORS AFFECTING THE PROJECT

20. The change process that accompanied the development priorities adopted by the new government in1993, dominated the political priorities and overshadowed the objectives of the project for a significantperiod of time. As support for the project waned the project became less cohesive and stalled. The impactof this was reflected in a negative mid-term evaluation and most mission progress reports until early 1995,which suggested that unless the constraints were removed, the project would be scrapped. During the mid-term review, implementation deficiencies in the effectiveness of the project management unit were alsodetected. This centered mainly in the lack of a project director capable of performing effective technicalfunctions, as well as progress evaluation, and coordination of the various components in the MOF. Amongthe factors instrumental in refocusing attention back on the pace, of implementation and achieving theintended goals of the project, was (i) the appointment during the last two years of implementation, of a wellqualified project technical director, and (ii) execution of new initiatives such as the decentralizationprocess, while simultaneously implementing an adequate normative and informational framework forfinancial control.

21. The project had agreed (with counterpart/USAID funds) to fund the hiring of qualified "line"consultants within the CGR and the MOF to assist as staff counterparts in the design and implementationof the project components. It was intended that by project-end these consultants would be incorporated intothe government wage bill. The CGR consultants were eventually transferred to the Treasury budget.However, the MOF consultants were not, and continued to be funded with counterpart project funds. Inaddition, the work emphasis of the line consultants in the MOF eventually focused mostly on the work oftheir unit rather than the project's work. Until the last two years of the project, the project consultantsfunded by the credit had also worked under the line managers in the MOF. Since this arrangement did notprovide for optimal coordination with the project management unit, IDA agreed with the government to hirethe technical team of consultants and have them placed directly under the project unit to advance on thework that had been intended under the previous structure.

22. Most implementation targets were met. Procedures for budget formulation, cash management, andelimination of the payment function of regional sub-treasuries, were revised and implemented. An earliergeneration IFMS module (SICOPRE) was implemented in over 20 decentralized agencies andmunicipalities, and the upgraded version (SIIF) began to be implemented in the new regional prefectures bythe end of the project. The dissemination of IFMS and accounting standards and guidelines, was completedfor all municipalities and decentralized entities following ratification of the first version of the Basic -Accounting Norms. Simultaneously, the CGR completed extemal audits of over 100 public entities andconducted management control analyses of at least 50 entities, primarily municipalities.

23. Some modules such as the debt management and electronic payments could not be implementedwithout coordination with agencies not financed by the project. The integration of the IFMS with the database which monitors extemal debt was halted due to the need for first upgrading the informatics platform at

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the Central Bank, the institution in Bolivia responsible for administering the extemal debt managementsystem but not financed under the project. The Central Bank is currently in the process of installing theSIGADE version 5.0 system which will allow interface with the I]FMS system developed under the project.

24. One of the important performance indicators for the project was the complete integration of allcentral level ministries to the IFMS data base in the Ministry of Finance. Though the IFMS has thecapability of implementing on-line connections via intemet, telephone link, or dedicated telecom lines, only6 out of the 20 central government agencies have been connected to the IFMS. Among the reasons givenwere the high cost factor associated with the use of dedicated telecom lines. Cheaper altematives wereanalyzed but due to lack of a political decision, and the previous govenmment's preoccupation with theupcoming election, no mandate to complete the connection was taken.

25. The high tumover of Ministers and Under-Secretaries at the MOF who were in essence themanagers and users of the IFMS system and regulatory norms, imipacted greatly on the continuity of theprogram during different phases. This high tumover signified that much time and effort was dedicated bythe Project Management Unit as well as supervision missions in the integration and remarketing of theproject to all key players.

26. Despite the above setbacks, the project started making good progress during its final phase becauseof a clear implementation strategy which emphasized the modemization and use of up-to-date informationtechnology to achieve a lasting integration of more efficient automated budgetary, cash management, andaccounting processes.

27. It should be pointed out however, that the project effectively contained two separate projects, oneof which was the CGR's component. In contrast to the MOF component, CGR management wascontinuous during the execution of the project, and the institutional strengthening achieved by the CGR canbe generally viewed as highly successful -- an account of this can be referenced under an institutionalassessment of the CGR which was prepared in mid-1997 (by J. Wesberry, ex-Principal Audit Coordinatorat the Bank, and now managing a similar program under USAID).

28. Bolivia was one of the first countries in Latin America to design and implement a modernframework and system for financial management and control. As such, there has been a somewhatexhausting leaming process in this case. The experiences of this project have served as a model of what isuseful for other countries and implementable in terms of laws, norms, procedures, and information systems.This will assist in implementing similar systems which are now being undertaken in virtually every countryin the Region.

D. PROJECT SUSTAINABILITY

29. Since the underlying principles of the project have been supported by government commitment andthe requisite legislative and administrative measures, the impact of the project will likely be sustained overa longer period. At the same time, the project may run some risk if key MOF officials are not fullysupportive of the IFMS framework developed under the project. If they try to dismantle the current projectstructure, its technical staffing, and system design developed to date, sustainability of the project willbecome questionable. In order to overcome this risk, it is imperative for the government to maintaincontinuity in the design and application of the new project, the Financial Decentralization andAccountability Project which builds upon the investment undertaken in the development of the IFMSsystem and extends it to the new decentralized governments. Continued support as well as conditionalityfrom IDA for these purposes, will also be essential for the long-term sustainability of the project'saccomplishments.

30. Constant rotation of staff and the reliance on consultants, however, poses a risk to thesustainability of the system developed. The CGR in contrast, has built up its internal skills by training and

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recruiting into its permanent structure, a skilled staff complement while reducing its dependence oninternational consultants. The MOF still depends on local consultants externally financed for much of itscore activities. This risk has been identified as common to Bolivia due to the characteristics of humanresource management in the government sector, and is one of the priorities for reform under the currentgovernment and reflected in another IDA project currently under preparation.

31. The Treasury provided the counterpart funds needed despite a USAID pullout of its committedfunds halfway through the project (mainly on account of non-compliance in the anti-drug enforcementprogram and eradication of coca harvests). However, it still needs to assure long term budget fundingonce all IDA and other donor funds are used up.

32. The sustainability of the IFMS system will require the institutionalization of an Informatics Unitwithin the MOF (already proposed by the government) to take ownership of the system and provide for itsfuture enhancement and maintenance. Establishing the Unit would also ensure consistency in theinformatic standards of the Ministry and consistency in the integrated architecture of the IFMS, ifexpanded. An Informatics Unit would also place the funding of this function squarely under thegovernment budget.

33. To minimize the risk of 'dis-integration' of the system, it is imperative to ensure that a mechanismfor coordination at the highest levels, and including all subsystems involved in financial management, be inplace to continue to promote the reform. The coordinating mechanism will lead to sustainable effortsbecause those involved will take part in the decision leading to new changes. Nevertheless, this processneeds to be supported at the highest levels to promote coordination and cooperation among the budget,treasury, and accounting Units which comprise the key drivers of the financial management system.

34. The government will continue activities for disseminating both the regulatory policy framework ofSAFCO as well as its application and operation of modern financial management systems. These effortsshould promote further transparency in public accountability by generating partnerships with variousstakeholders including the municipal and newly decentralized prefectural governments.

35. The budget and cash disbursement process of the MOF still includes off-budget emergencypayments for high priority sectors. These fall under the general rubric of "debit notes". To ensuresustainability of the IFMS system, such budget payments will need to be eventually incorporated into thesystem to reduce functional fragmentation in the comprehensive accounting of public resources.

E. IDA PERFORMANCE

36. Project Identification: Satisfactory. IDA correctly identified the goals of the project and embarkedon the implementation of reforms considered innovative, and a model for other countries to follow at thetime. In addition, project objectives were a consistent follow-up of the first IDA financed project andformed part of the integral set of reforms intended to stabilize the economy supported by the government.

37. Project Preparation and Appraisal: Moderately Satisfactory. IDA staff designed and prepared theproject thoroughly with assistance from high caliber international consultants. However, the design ofproject targets was too complex, scattered and somewhat inconsistent within the SAR document Therewas a clear need to focus prioritize the targets during implementation. Also detected, was the need formore technical design or guidelines for individual project components. Many of the design elements werealso very descriptive with long explanations regarding the 'objectives' of such components, but notsufficiently 'prescriptive' to allow focusing on intermediate implementation targets and indicators whichwould show evidence of progress in completing key products.

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38. Project Supervision: Satisfactory. During the first half of the implementation period, the IDAsupervision team did not include sufficient task skills in the financial and information technology areas,which otherwise might have detected some of the emerging problems in project execution on the MOF side.In addition, during this period government relations with IDA soured somewhat due to the task manager'sinsistence on not utilizing Bolivian nationals to direct the project from the government's side, claiming thatthey were too subject to political influence. However, during the second half of the project, the task teamcomposition was changed, and with a simultaneous change in the govermment's project leadership (withanother Bolivian national with accounting & informatics experience), the task team felt satisfied thatqualified nationals could indeed manage the project successfully. During that period, IDA staff maintaineda constant interaction with the counterparts throughout the progression of the project. They also dealt withtechnical and implementation issues in depth, and adopted a pro-active approach to overcome problems andfind remedial actions. Aide Memoires and Back to Office Report-s provided an exhaustive discussion ofproject activities undertaken, current status of project components, issues and constraints. Technicalperformance targets and interventions were intensified during the latter years.

F. BORROWER PERFORMANCE

39. Project Identification through Appraisal: Satisfactory. There was strong government andstakeholder commitment especially since the project followed-up on an ongoing program and reform effort.Procurement procedures were conducted in a satisfactory manner and audit reports were submitted on atimely basis.

40. Project Implementation: Moderately Satisfactory. Under the MOF components there wasdeficiency in performance in the early stages of the project due to the appointment of key projectdirectors/consultants with insufficient qualifications. However, during the last two years, the performanceof the new technical director was effective, and allowed IDA to re-set performance targets, most of whichwere achieved.

41. Counterpart funding was available at all times in the amount prescribed by the project agreement,despite the fact that USAID pulled out its remaining funds towards the middle of the project, due toBolivia's non-compliance with drug eradication targets.

42. Project components did not perform uniformly and stronger executive mandates from the Ministerof Finance would have been desirable. Due to constant political changes and reappointments in Ministers,Secretaries and UnderSecretaries, it took long period of time to ensure the 'buy-in' of these new appointees.However, as mentioned, this was not the case in the Comptroller IGeneral's office which maintained a stablecadre of managers and ensured a much smoother project execution.

G. ASSESSMENT OF OUTCOME

43. Overall rating: Satisfactorv. While the achievements of the project, particularly in the last twoyears were impressive, some unfinished work to-date, would preclude a higher rating. A few remainingtasks have yet to be completed such as finalizing connection of all the central entities to the IFMS,finalizing internal debt management modules, perfecting the cash programming function as an automatedmodule under the IFMS system, ensuring capture of all off-budget transactions, and timely budgetexecution data from decentralized entities. Some of these tasks will carry over into the subsequent projectand some, such as the external debt module will depend on agencies that are not properly part of theproject's financing.

44. Major objectives, however, were achieved, including the capture of all central government budgetaccounts on the financial information system, the approval of all the SAFCO regulatory norms, and the

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design of a critical mass of a public sector financial management infrastructure supported with softwareand informatic equipment to assure the security and control of financial information.

H. FUTURE OPERATION

45. Given the major reforms mandated by the Popular Participation and AdministrativeDecentralization Laws, IDA decided to continue support of Bolivia's public financial managementmodernization program so as to increase the capacity of the newly decentralized governments andmanagement of increasing funds allocated/transferred to them from the central government. In addition,continued support in the central government was also warranted to ensure the full application anddevelopment of electronic payment and retrieval capabilities being developed under the IFMS. Moreintensive training and dissemination efforts were also required to bring on board all decentralized entities aswell as to ensure operating knowledge by public sector staff in managing technology based financialmanagement systems with requisite procedures and controls. In light of this strategy, IDA and theGovernment prepared the follow-up project (now awaiting effectiveness) focusing on the decentralizedgovernment sector, and increasing the CGR's capabilities for auditing these sectors, including capacitybuilding in conducting forensic anti-corruption audits, reviews of large public contracts, and quality controlof private sector audit standards. The project will also address some of the unfinished tasks of PFMO II toensure that the systems being implemented at the decentralized levels will be fully upgradable based onimprovements in their prototypes developed at the central government level.

46. The follow up project (Financial Decentralization and Accountability) has set more streamlined yetquantifiable performance targets to avoid the ambiguities inherent in the implementation of PFMO II. IDAhas also made it clear that compromises on the technical qualifications of the new project's leadership willnot be made, to assure swift implementation and proper guidance under the government project team.Based on the experience of PFMO II, IDA will also closely monitor intra-Ministerial issues in the MOF,and seek to ensure that a mandate at the highest level is put in place to ensure inter-Unit cooperation,particularly for fully integrating the budget, treasury, and accounting functions. The project will alsoenable Bolivia to perpetuate institutional strengthening procedures covering newly decentralized sectors andmunicipalities, and aim to incorporate at least 90% of total public funds administered in the country. Thiswill be supported by the implementation of integrated financial management systems (IFMS) under thedecentralized Prefectures, decentralized agencies, and municipalities, which will link into the nationalbudget via the central IFMS network operated by the Ministry of Finance.

I. KEY LESSONS LEARNED

47. The above analysis of project implementation suggests that the critical issues and main lessons tobe learned from the project are as follows:

* The importance of project ownership by the government and the implementing agency cannot beoveremphasized, as shown in this case where the CGR's ownership of its component remainedconstant, and, by being an autonomous agency was not affected by other government policies, whereasthe MOF's priorities and ownership of the project fluctuated throughout project execution, not in theleast due to the frequent turnover in the executives of the Ministry.

* Satisfactory project implementation is determined by a project design which should be kept as simpleas possible. This includes setting more realistic implementation targets and key indicators ofperformance which can be more easily monitored. Given the difffuse range of targets and objectivesinitially specified, the IDA project team helped to prioritize these within the last two years ofimplementation, to ensure that core targets were met, particularly in terms of finalizing the IFMSproduct and its supporting regulatory guidelines.

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* Strong technical leadership is vital for setting the direction for the project. The turnover of projectdirectors impacted negatively during the project's first four years of execution, and should be based onability rather than constant changes in political orientation/leadership within the government. Strongerconditions performance reviews on this aspect should be specified in the project's credit covenants.

* Institutionalizing procedures for cash management and control requires, in addition to technicalassistance, a tremendous change in the conceptual framework supporting financial management in thepublic sector. This means a change in "institutional culture" from one of control to one ofaccountability, for which there is great resistance. This cannot easily be tackled by a project of thismagnitude. To confront this challenge it is important that the project and the supporting countryprogram have strong political support and commitment at the executive level at all times within theMOF, to provide the impetus for that cultural change and/or mandate if need be.

* Continual integration and coordination of the major users in the government is a key element for thedevelopment of accepted financial infonnation systems. Coordination of the system entails a great dealof commitment by executing agencies to the concept of efficiency and transparency. Integration anduser consultation prevents uneven, unharmonized development. of sub-systems (eg.: budget, accounting,cash) caused by turf struggles among decision makers responsible for managing each functional area.

* While computerization provides the tools for integration of cormplex organizations, the informationneeds of each entity must be carefully defined and the interfaces between the various operating units orinformation sub-systems understood. To promote more satisfaction and trust among users this meansrecognizing and integrating "de facto" procedures or currently practiced (even if sub-optimal)procedures. Ignoring the latter causes dissatisfaction and distrust among users. Rather than forceabrupt mandates, the goal should be to slowly wean users of their dependence on parallel systems. Inthe process, "de facto" procedures such as off-budget debit note payments, should be integrated intothe system once they can be made consistent with the prescribed financial management norms.

- It is important to note that while the project supported the design of systems for financial managementand control, successful implementation of these systems would be beyond the scope of a project of thisnature without disciplined apolitical policies governing the budget execution process. For example, theproject was successful in implementing a program based-budgeting system, but not successful inimplementing a budget evaluation system. However, by observing how the budget is actually managedday-by-day, one can see that although procedures for presenting a program-based budget are followed,the approved budget is seldom executed as officially agreed. The Bolivian Treasury and the politicaldirectorates decide, given the availability of funds, what payments will be executed, and which will becut, often without consultation with recipient agencies and without knowledge of how this affects their"programs". From that viewpoint, the exercise of budget programming and budget evaluation canseem almost pointless. Likewise, a government cannot effectively exercise the "audit control" functionif (i) the organizational structures lack an appropriate system of internal control, (ii) incentives forrespecting uniform procedures are absent, (iii) the CGR cannot enforce legal compliance due topolitical interference, and (iv) the judicial system is largely ineffective. Therefore, although technicalassistance is a desirable tool for implementing these systems, it cannot stand alone. What would bemore effective in the long run is that such assistance form part of a comprehensive country programstrategy complemented with a broader adjustment effort for the public sector management framework(particularly covering the budget area), but under a separate operation. Such policy-related assistanceshould include govemance reforms to curtail Congressional or Executive mandates which allowinflating budgets unrealistically, without the requisite sources ifor revenue backing.

* Use of technology and the automation of financial management systems can be an effective tool andstrategy for reducing personal discretion in the administration of public financial managementprocesses. Proper automation and a high degree of computer-based security, while carrying its own

risks, also allows the 'automation' of transaction standards, and puts in place controls which are moredifficult to break given data security safeguards now available on technological platforms. This aspectshould be exploited in such projects, while at the same time ensuring that the government audit functionalso partakes of informatic-based audit tools to maintain relevance and keep abreast of moremodernized public financial management systems.

PART II: STATISTICAL ANNEXES

Table 1. Summary of Assessments

Table 2. Related IDA Credits

Table 3. Project Timetable

Table 4. Loan/Credit Disbursements

Table 5. Key Indicators for Project Implementation

Table 6. Key Indicators for Project Operation

Table 7. Studies Included in the Project

Table 8A. Project Costs

Table 8B. Project Financing

Table 9. Economic Costs and Benefits

Table 10. Status of Legal Covenants

Table 11. Compliance with Operational Manual Statements

Table 12. IDA Resources: Staff Inputs

Table 13. IDA Resources: Missions

APPENDIX A. BORROWER'S EVALUATION

Table 1: Summary of Assessments

A. Achievement of Objectives Substantial Partial Negligible Not applicable

Macro Policies El E El

Sector Policies 5 5 0

Financial Objectives [3 5 Cl

Institutional Development 5 L3J El E]Physical Objectives 5 5 5Poverty Reduction 5 5 5Gender Issues E 1 E I

Other Social Objectives 5x 5 5 I

Environmental Objectives 5 5 5Public Sector Management Ix] S S SPrivate Sector Development 5 5 5 X

Other (specify) ] 5 X]

B.Project Sustainability Likely Unlikelv Uncertain()(/) (V/)

Highly M!dodLratelC. Bank Performance satisfactorv Satisfactorv Deficient

(i") (/) (/)

Identification I E E

Preparation Assistance 5 1 5

Appraisal 5 Ix

Supervision 5 5

D. Borrower Performance Highly Moderatelysatisfactory Satisfactorv Deficient

(/) (/) (/)

Preparation 3 I O

Implementation I I]

Covenant Compliance a ] E

Operation (if applicable) E ] E

Hiahly HighyE. Assessment of Outcome satisfactory Satisfactorv Unsatisfactory unsatisfactory

(") (E) E

E] rxi~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.

Table 2: Related IDA Credits

Credit Title Purpose Year of Status___ ___ ___ ___ ___ ___ ___ ___ ___ ___ A pproval _ _ _ _

Preceding Operations

1. Public Financial Mgmt. Implementing SAFCO Law and drafting regulations. 1987 CompletedOperation - Credit 1809-0 Strengthening the central bank and restructuring the

development banks.

Parallel Operations

2. Municipal Sector Dev. Project Strengthening of various administrative and institutional 1994 OngoingCredit 2565-0 aspects of selected municipalities, including capacity

building in municipal financial management functions.

3. Rural Communities Dev. Project Strengthening of rural municipal public service functions 1996 OngoingCredit 2772-0 including institutional training in tax administration as

part of the municipal financial managernent role.

Following Operations

4. Financial Decentralization and Implementing a sustainable process of self-management 1997 AwaitingAccountability Project, Cr. N033-0 in financial administration, instituting sound financial Effective-

management standards in public entities, and building nessa strong public auditing function covering the decentra-lized prefecture governments and municipalities.

Table 3: Project Timetable

Steps in Project Cycle Date Planned Date Actual!.______________________________________ _______________________ L atest E stim ate

Identification (Executive Project Summary) June 1990 May 1990

Pre-appraisal September 1990 October 1990

Appraisal January 1991 February 1991

Negotiations April 1991 May 1991

Letter of Development Policy (if applicable) na na

Board Presentation June 1991 June 1991

Signing September 1991 September 1991

Effectiveness na December 1991

First Tranche Release (if applicable) na na

Midterm Review na May 1994

Second (and Third) Tranche Release na na

Project Completion June 1996 June 1997

Loan Closing December 1996 December 1997

Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual(US$ million)

Fiscal Year 92 93 94 95 96 97 98 | Total

AppraisalEstimate 2.0 5.6 7.7 9.4 10.7 11.3 11.3 11.3

Actual 1.5 2.6 4.4 5.8 7.0 9.3 10.8 10.8

Actual as % of Estimate 75 46 57 62 65 82 96 96

Date of Final Disbursement: January 29, 1998

Table 5: Key Indicators for Project Implementation

No. Indicator Estimated Actual

I Ministries, eligible public entities and the Central October 1995 Process initiated inGovernment institutions to start formulating their own 1992 and completedbudgets (Sec. 3.07) by end-1995.

2 Complete the organizational changes for cash management June 1995 Completed end-1996.in TGN (Sec. 3.08)

3 Cause the payment system through the Banking Network to June 1995 For non-personnelbe operative (Sec. 3.08) costs, completed end-

1992, for other costs,capability in place at

_ ______________________________________________ _ ______________ end-1996.4 Elimination of function of the sub-treasuries within TGN June 1996 Function of cash

(Sec. 3.08) distribution by sub-treasuries eliminated

______________ by end-1996.5 Development of IFMS for 14 public entities (Sec. 3.09) December 1994 Partially fulfilled by

mid-1995, however,due to public sectorstructure changes,target entitiesmodified to includePrefectures by end-1997.

6 Dissemination of IFMS systems for approximately 50 December 1995 Fulfilled Decemberdecentralized institutions and 50 municipalities (Sec. 3.09) 1996: Targets

modified (as per 3rdamendment) due tochanges fromDecentralization andPopular ParticipationLaws.

7 Dissemination of the Accounting Standards for eligible December 1995 Fulfilled end-1994decentralized institutions (Sec. 3.09) following approval of

the first version of theAccounting Basic

_ _____________________________________________ _ N orm s.8 Dissemination of the Accounting Guidelines for Public December 1995 Fulfilled end- 1994

Enterprises to Eligible Public Entities that cannot finance following approval ofdeveloping their own accounting systems (Sec. 3.09) the first version of the

Accounting Basic_____________________________________________ ______________ Norms.

9 Introduction of uniform accounting and classification December 1995 Fulfilled end-1994methods to 100 local municipalities (Sec. 3.10) following the

approval of the first

No. Indicator Estimated Actual

version of theAccounting BasicNorms.

10 CGR completing external audits of 100 Eligible Public December 1994 Fulfilled end-1994.Entities and management systems analyses of at least 50Eligible Public Entities (Sec. 3.11)

H1 CGR annually undertaking external audits and December 1996 Fulfilled end- 1996.management systems analyses of at least 25% of the totalEligible Public Entities (Sec. 3.11)

12 Emergency Program (EP) Staff to be absorbed by GAO December 1995 Partially fulfilled:(Sec. 3.12) 'Programa de

Emergencia' (EP)absorbed by theTreasury Sub-secretariat in June19Q,

13 Preparation of draft regulations covering the areas of December 1996 Final (post-draft)treasury, public credit, procurement, personnel, operations regulations/normsprogramming, and inter-institutional organization (Schedule approved by end-2 (B)). August 1997.

14 Implementing a training program, and provision of courses December 1996 Full complementfor dissemination of financial management, administration, training on-goingand control procedures. Design of a Masters Degree since end- 1994.program in accounting and public management Master's Degree in(Schedule 2 (C)). Auditing and Public

Administrationdesigned and put inplace, in conjunctionwith Universidad

_______________________________________________ Catolica in mid-1995.

Table 6: Key Indicators for Projeclt Operation

Estimated Actual

I. Key Implementation Indicators in SARJPresident's Report na na

II. Modified Indicators (if applicable) na na

III. Modified Indicators for Future Operation (if applicable) na na

Table 7: Studies Included in the Project

Study Purpose as defined at Status Impact of studyAppraisal/Redefined

Financial Management and Control1. Developing a framework and Ensuring uniformity of procedures Done An accounting systems that ensures uniformity of criteria in

guidelines for comprehensive and classifications in public financial the Non-financial Public Sector for budget and assetAccounting Systems management transactions.

Budg-etin2 Study2. Development of guidelines for Set common guidelines for all Done Clear guidelines for budget formulation of the Prefects

programming Prefecture budgets Prefecture regional governments necessary because the Decentralization Law increased theirin 1996 scope and level of public resources & programs managed.

3. Investigation and identification of Create a general framework for Approved Basic standards set for the Budget system covering thestandards for design of the structure and operation of the R. S."i 217095 national Public SectorBudget system budgeting sub-systemr

Accounting Standards Review4. Definition of basic standards for a. Develop a conceptual framework Approved a. Basic standards for the implementation of agency specific

an integrated governmental for public sector accounting. R.S. accounting systems approved.accounting system. b. Produce Financial Statements 218040 (2nd b. Availability of reliable and timely information for

version) comparison of financial info., and historical analyses .

Regulatory & legal framework studies1. Basic Norms for the other sub- Develop guidelines and regulatory Approved Basic norms for the regulatory systems covering financial and

systems of SAFCO Law: norms to support the implementation R. S. administrative functions under the Law have been approved* Operations Programming of the Law of Governmental 216784 under the specified Executive Resolutions.* Administrative Organization Management Control and Audit 1178 217055* Procurement of Goods and (SAFCO). Analyze regulatory 218066

Services structures and alternatives used to* Treasury find appropriate applications within 218056* Public Credit the context of Bolivia's legal 218041* Personnel Management framework. 217064

i SR

/Resoluci6n Suprema (Supreme Resolution).

Table SA: Project Costs

Appraisal Estimate (US$ m) Actual/Latest Estimate (US$ m)Item Local Foreign Total Local Foreign Total

Costs Costs . Costs Costs

Financial Management 3.81 5.35 9.16 6.10 6.07 12.17

Standards & Regulations 0.25 0.76 1.01 0.54 0.00 0.54

Training 1.98 1.40 3.38 0.48 0.95 1.43

Institutional Support 2.99 0.00 2.99 9.02 0.00 9.02

Project Management 0.29 1.16 1.45 1.84 0.25 2.09

Refinancing of PPF 0.00 1.50 1.50 0.00 0.90 0.90

Total Base Cost 9.32 10.17 19.49 17.98 8.17 26.15Physical Contingencies (3%) 0.28 0.30 0.58 0.00 0.00 0.00Price Contingencies (12%) 1.40 0.81 2.21 0.00 0.00 0.00

: Total Project Cost 11.00 11.28 22.28 17.98 8.17 26.15

Table 8B: Project Financiing

Appraisal Estimate US$ m) Actual/Latest Estimate (US$ m)Source Local Foreign Total Local Foreign Total

Costs Costs Costs Costs

IDA 0.00 11.28 11.28 4.58 6.40 10.98Government 11.00 0.00 11.00 7.34 1.97 9.31USAID 5.86 5.86

Total 11.00 11.28 22.28 17.78 8.37 26.15

Table 9: Economic Costs and Benefits

This project consisted of a technical assistance credit involving consultant support and fundinginformatics equipment for developing modernized governmental auditing and financial managementsystems. In this respect, the original project documents did not include any cost/benefit orcost effectiveness analysis. Nevertheless, while exact benefits cannot be directly imputed froma project of this nature, this section attempts to list some of the qualitative benefits achieved, andwhich will have direct impacts in the cost and efficiency of governmental financial management inBolivia:

1. Incorporation of all budget and cash flow accounts of the central government(20 ministries/agencies) on the MOF's central financial management system. Thisallows continuous computerized monitoring of budget execution.

2. Computerization of the cash programming function to allow the Treasury toallocate public monies according to availability and prior budgetary allocations.

3. Implementation of an audit cycle covering the entire public sector (centralgovermment and municipalities), allowing the CGR to enforce submission bypublic entities of their financial statements showing budget execution.

4. Piloting of 6 central ministries/agencies to allow electronic on-line retrieval ofbudget and payment information. This also allows the future capability for sendingbudget payment requests electronically, thus avoiding delays and paper work.

5. Computerization of all central government transfers to municipalities under thePopular Participation program, allowing national budget funds to be consolidatedon a country basis, in order to account for all revenue sources and transfers.

The National Budget of Bolivia is currently B$ 9.1 bn. or US$ 1.7 bn. equivalent. Even assumingconservatively that the improved financial management systems in place will allow more timelytracking of budgets and expenditures, this should permit the government to allocate revenuesmore efficiently and avoid contracting 'carry-over' short term borrowings to tide-over itsliquidity shortages in disbursable funds. In addition, better monitoring of budget expenditures andrevenues will also allow for investment of idle funds in interest earning accounts, pending disburse-ment. These two factors in-and-of-themselves, would, in commercial circumstances yield costefficiencies and financial savings between 1-4%. However, assuming conservative savings frominvesting idle cash funds, or not borrowing funds amounting minimally to 1% of the national budget,his would yield $US 2.0 in. equivalent in annual net savings', which would recover the invest-

ment cost of $US 11.3 mn. plus an assumed market interest rate paid of 12% on the credit funds,after no more than 6 years following project implementation2. In the long run, discounting thesesavings indefintely, would result in an additional $US 4.7 million, in present value terms, i.e., a netbenefit.

1/ Equals ($1,700,000 x .01) x .12. The market rate for investing/borrowing is assumed to be close to 12%.

l/ Average disbursed balance ($5.65 in.) x 12% market rate + $11.3 mn. (principal) = $12.0 in. / 6 = $2.0 mn.

Table 10: Status of Legal Covenants

Agreement Section Covenant Present Original Fulfilment Revised Description of Covenant CommentsType Status Date Fulfilment

l __________ ________ ________ ___________________ D ate

evelopmentCredit 3.01 (a) 4 C Continuous Borrower's commitment to project objectives

Agreement and to provide funds, facilities, services andother resources.

3.02 3 C Continuous Procurement of goods and services to be governed bySchedule 3 of the Agreement

3.04 9 C 2/28 & 8/31 Preparation of progress reports 3rd amendment modifiedconcerning the execution of the Project to apply to PIU only, not

all public sector entities3.05 5 C Each November 15 Dec. 31 Submission of PAO by November 15 each

year regarding carrying out of the Project

3.06 12 C December 31, 1993 Deleted Establishing procedures for recruitment, Condition removedhiring and employment in CGR under 3rd amendment

3.07 12 C Dec. 31, 1992 Oct. 31, 1995 Ministries and the Eligible Public Entities toformulate their own budgets

12 C Dec. 31, 1993 Regional Dev. Corporations and Central Govt. Regional CorporationsInstitutions and Decentralized Institutions eliminated with Decent.to formulate their own budgets law. In their place, the

Prefectures were formed3.08(a) 12 C Dec. 31, 1992 Jun. 30, 1995 Completion of organizational changes for cash

management in TGN

3.08 (b) 10 CP June 30, 1991 June 30, 1995 Having the budget payment system to be Capability set up; requireseffected via the Banking Network central bank upgrading to

fully implement system.3.08 (c) 10 CP Dec. 31, 1991 June 30, 1996 Carrying out elimination of subtreasuries within TGN Function eliminated as

per 3rd amendment, butoffices reconverted forpaying pension distribut.

3.09 10 C June 30, 1994 [Dec. 31, 1995|Develop. FMS systems & acctg. standards for entities |FMS developed, though

Agreement Section Covenant Present Original Fulfilment Revised Description of Covenant CommentsType Status Date Fulfilment

___ ___ __ ___ _ _ ___ ___ ____ D ate .upgrading of systems

3.10 10 C December 31, 1994 Dec. 31, 1995 Implement audit, accounting & budgeting methods in process, under newproject

3.11 (a) 5 C Annually Preparing annual audit plan by CGR to carryout external audits and management analyses ofEligible Public Entities

3.11 (b) 10 C Dec. 31, 1994 Completion of such audit and management analysesof at least 50 Eligible Public Entities

C Dec. 31, 1996 Completion of such audit and mgmt. analysesof at least 25% of total Eligible Public Entities

3.12 12 CP June 30, 1992 Dec. 31, 1995 Emergency Program Staff to be absorbed by GAO Eventually absorbed bytheTreasury

3.14 9 C November 30, 1994 Reviewing project progress measured againstperformance indicators

4.01 (a) 2 C Continuous Maintaining records and accounts of the Project

4.01 (b) 1 C Within 6 months Furnishing audit reportsafter end of each

year4.01 (c) 1 C Maintaining records and accounts of Credit Account

5.01 12 C Throughout Amending, abrogating, or suspending SAFCO Lawif it adversely affects carrying out of the Project

Status Covenant ClassC - Complied with 1. Accounts/AuditCD - Compliance after Delay 2. Financial performance 8. Indigenous peopleNC - Not complied with 3. Flow & utiliz. of project funds 9. Monitoring, review and reportingSOON - Compliance Expected 4. Counterpart funding 10. Implementation

in reasonably short time 5. Management aspects of project 11. Sectoral or cross-sectoral budgetary or other resource allocationCP - Complied with Partially 6. Environmental covenants 12. Sectoral or cross-sectoral regulatory/institutional actionNYD - Not Yet Due 7. Involuntary resettlement 13. Other

Table 11: Compliance with Operational Manual Statements

Statement Number and Title Describe and Comment on Lack of Compliance

No Lack of Compliance was Evidenced

Table 12: Bank Resources: Staff Inputs

Planned Revised ActualStage of Project C cle Weeks US$ Weeks US$ Weeks US$

Preparation to Appraisal 18.0 45.0 na na 36.0 70.4

Appraisal 7.0 17.5 na na 8.1 20.4

Negotiation through Board Approval 13.0 32.5 na na 26.3 41.6

Supervision 88.0 220.0 na na 86.1 242.9

Completion 4.0 10.0 na na 6.0 15.0

TOTAL 130.0 325.0 na na 162.5 390.3

Table 13: Bank Resources: Missions

Performance Rating

Stage of Month/ No. of Days Specialized Implemen- Develop. Types of

Project Cycle Year Persons in Staff Skills tation Objectives Problems

Field Represented Status

A. Through Appraisa

1. Identification May-90 3 5 Task Mgmt/ na

Financial/

Accts/Audits

. Pre-appraisal Nov./90 5 10 Task Mgmt/ na

Financial/

Accts/Audits

Info. Systems

3. Appraisal Feb-91 Task Mgmt/ na

Financial/

Accts/Audits/

Info. Systems

B. Appraisal through na

Board Apiroval

C. Board ADDroval na

throuh Effectiveness

D. Supervision

Supervision I Feb-92 3 10 Task 1 I (i) Lack of understanding by many entities onMgmt./Public the full-scope and usefulness of program-basedFinance budgeting.

(ii) Delay by MOF in deciding on eliminationof sub-treasuries, due to political factors.

Supervision 2 Nov-92 3 7 Task I (i) Lack of national consensus on SAFCO Law.

Mgmt./PublicFinance

(ii) Difficulty in identifying and hiring higher-level local and international consultants.

(iii) inadequate coordination of activities withinMOF, and between MOF and CGR.

Supervision 3 Oct-93 2 15 Task Mgmt./ 2 2 (i) Delay in project activities due to reduction inFinancial counter-part funding and change in authorities.

(ii) Delay in some components due to lack ofdefinition of objectives and political support.(iii) Technical Director's failure to performtechnical functions, progress evaluation andcoordination of components.(iv) Authorities hiring outside of establishednorms.

Performance Rating

Stage of Month/ No. of Days Specialized Implemen- Develop. Types of

Project Cycle Year Persons in Staff Skills tation Objectives Problems

l____ Field Represented Status l

Supervision 4 Jun-94 3 11 Task Mgmt/ U S (i) Delay in presenting norms for procurementFinanciallTax of goods and services due to changes inAdmn. government.

|Supervision 5 Jan-95 3 9 Task Mgmt/ U SFinancial (i) Budgeting objectives not achieved.Accts/ Audits

(ii) Elimination of sub-treasuries unlikely dueto:

(a) banking network cannot reach certainparts of interior; and (b) sub-treasuries may beassigned new functions.

Supervision 6 Oct-95 3 5 Task Mgmt/ U SFinancial (i) Lack of coordination among subsecretariatsAcctsl Audits within MOF.

(ii) Lack of technical leadership at Project Unitlevel.

(iii) Lack of political commitment to objectivesof the project.(iv) Implementation of decent. budget acctg.system (SICOPRE) not very successful.

Supervision 7 May-96 Task Mgmt./ S S (i) Revenue sources of some central agenciesFinancial not yet fully captured on IFMS.

(ii) Resistance from some central agencies inhaving a common accounting systems.

Supervision 8 Oct-96 4 10 Task Mgmt./ S S

Accts/Audits/ (i) Treasury Public Credit Division not reachedSystemsA a decision on type of debt monitoring system.Controls

(ii) Management of debt information betweenMOF and Central Bank.

Supervision 9 Jun-97 3 10 Task Mgmt./ (i) Budget payment request voucher via on-lineFinancial/fl ugtpyetrqus oce i nlnFinancal/ not implemented due to non-acceptance ofLegal electronic transactions by public sector auth.

Supervision 10 and Dec-97 2 9 Task Mgmt/ S S (i) 14 out of 20 central govt. agencies notCR Financial connected to IFMS due to resistance from some

managers in the MOF.

Appendix A: Borrower's Evaluation

INFORME DE CUMPLIMIENTO DE LA IMPLEMENTACIONPROYECTO ILACO

I DESCRIPCION Y OBJETIVOS DEL PROYECTO

El objetivo del Proyecto es el de mejorar la eficiencia, eficacia y transparenciadel sistema de administraci6n de recursos del Prestatario a trav6s de: (a) lainstitucionalizaci6n de procedimientos de presupuesto, contabilidad,administraci6n de caja y auditorfa en varios niveles del Gobierno; (b) la mejorade la capacidad institucional para implantar los nuevos procedimientos, tantoen el nivel de Administraci6n Central como Regional; (c) la provisi6n alGobierno de las funciones de control posterior, vitales para el fortalecimientode la respondabilidad (accountability) de los resultados por la funci6n p6blica;y (d) desarrollar recursos humanos capacitados para mantener los nuevosprocedimientos.

El proyecto consta de los siguientes componentes: (a) Administraci6nFinanciera y Control, para crear y/o modernizar normas y procedimientos depresupuesto, contabilidad administraci6n de caja (Tesoreria) y auditoriagubernamental en el ambito de la Administracion Central y difundirlasposteriormente a otros niveles del sector publico; (b) desarrollo de normativay regulaciones, para revisar y/o proyectar la normativa requerida por la Ley1178 (SAFCO), en programaci6n de operaciones, administraci6n de personal,administraci6n de bienes y servicios y la racionalizaci6n del sector pcublico nofinanciero; y (c) capacitaci6n, para asegurar el flujo de servidores publicos denivel alto y medio y otros profesionales competentes en administraci6nfinanciera y auditoria modernas, responsables por la operaci6n, difusi6n,fortalecimiento y sostenibilidad de la normativa y regulaciones recientementeemitidas. El proyecto sera implementado por tres agencias separadas, laContraloria General de la Republica, el Ministerio de Finanzas y el Centro deCapacitacion de la Contraloria General, con la coordinaci6n y direcci6ngeneral de la Unidad de Gerencia (Direcci6n Tecnica), existente, bajo laresponsabilidad del CONSAFCO, consejo a cargo de la definici6n de politicaspara la administraci6n financiera y control en Bolivia, tambi6n existente, elmismo que esta conformado por el Ministro de Planeamiento y Coordinaci6n, elMinistro de Finanzas, el Contralor General de la Republica, el Presidente delBanco Central de Bolivia y el Contador General del Estado.

Los objetivos especificos de cada componente se describen a continuaci6n:

1. Administracion Financiera y Control. (i) capacidad de elaborarpresupuestos en el ambito de entidades publicas, transferencia de laresponsabilidad de formulaci6n de presupuesto del Ministerio de Finanzas,a cada entidad, basado en actividades e inversiones planificadas y mejorarla capacidad de la Subsecretaria de Presupuesto para la evaluaci6n depresupuestos. (ii) manejo de caja, fortalecimiento de las funciones deTesoreria, ajuste de los mecanismos de desembolso y otorgamiento de

2

cuotas para la ejecuci6n presupuestaria, racionalizaci6n de los pagos delTesoro mediante la eliminaci6n de los subtesoros y su sustituci6n a travesde pagos mediante la red bancaria; (iii) desarrollo de sistemas decontabilidad consistentes con las normas desarrolladas previamente peroespecificos para 14 entidades representativas, para su replica en otrasentidades descentralizadas y gobiernos locales, de manera que se asegurela uniformidad de procedimientos y clasificaciones, sin limitarse a losinformes de flujo de caja; y (iv) auditoria gubernamental que permita a laContraloria General de la Republica ejercer las responsabilidadesenmarcadas en la Ley SAFCO, especialmente para fortalecer larespondabilidad (accountability) publica de una manera coherente yarm6nica.

2. Desarrollo Normativo. Luego de la revisi6n de la actual legislaci6n y conel enfoque de la Ley SAFCO (1178), es necesario definir la normativa enlas siguientes areas: (i) programaci6n de operaciones para asegurar elentendimiento comun de los procedimientos para programar insumosfisicos individuales de cada agencia, de manera que sean reflejadosfinancieramente en sus presupuestos; (ii) administraci6n de personal queincluyan criterios estandar de selecci6n y remuneraci6n de servidorespublicos pagados por el T.G.N.; (iii) normas y procedimientos y estandarespara la administraci6n de bienes y servicios; (iv) organizaci6n paracoadyuvar a Ia redefinici6n de funciones y relaciones en el sector publico,eliminando redundancias y estableciendo patrones organizacionales dentrode las instituciones publicas, y (v) estandares y procedimientos detesorerfa, administraci6n de caja y cr6dito publico para institucionesdescentralizadas.

3. Capacitaci6n. Capacitaci6n en sistemas basicos de administraci6n ycontrol para facilitar el flujo de profesionales competentes del sector publicoen niveles altos y medios, necesarios para operar y dar continuidad a lossistemas creados y definidos en la Ley SAFCO (1178). Las actividades decapacitaci6n disehiadas para explicar y difundir los principios del SAFCOnecesitan ser revisados y el curriculo redisenado para reflejar los recientesdesarrollos que resultan de la actual implantaci6n de la Ley. El proyectoayudara a financiar instructores bolivianos quienes seran capacitados ent6cnicas de ensenanza de manera que todos los instructores extranjerosseran completamente eliminados a la conclusi6n del proyecto. La creaci6nde un nucleo de servidores publicos competentes es critica dada latradicional debilidad del sistema educativo en formar profesionales capacespara trabajar como contadores en lugar de auditores y tenedores de libros.El objetivo del curriculo de nivel universitario es el de ayudar a establecerun vehiculo permanente para futura capacitaci6n a nivel de post grado enadministraci6n financiera publica.

Los objetivos establecidos para el proyecto en los componentes deAdministraci6n Financiera y Desarrollo Normativo fueron planteados bajo unaestructura econ6mica en la cual el sector puiblico no financiero estabaconformado por el Gobierno Central (Administraci6n Central e Instituciones

3

Descentralizadas sin fines empresariales), Gobiernos Territoriales(Corporaciones Regionales de Desarrollo, Prefecturas Departamentales yMunicipios) e, Instituciones de Seguridad Social, por lo tanto las actividadesdel Proyecto fueron orientadas a este contexto, desarrollando sistemas paraser implantados de manera gradual en la administraci6n central y,posteriormente en el ambito descentralizado, administraci6n local y empresaspublicas. Esta situaci6n se cumpli6 entre 1991 y fines de 1993. En cuanto a losobjetivos del componente de Control y Capacitaci6n, estos fueron establecidospara mejorar las funciones de control externo y para formar profesionales conalto grado de conocimiento del Sistema Integrado de Administraci6n Financieray Control. Los objetivos originales del proyecto fueron planteados de unamanera satisfactoria para su implantaci6n.

II. Cumplimiento de los Objetivos

Se considera que los principales objetivos del proyecto fueron alcanzados demanera satisfactoria para el gobierno.

La Administraci6n Central cuenta con un Sistema Integrado de lnformaci6nFinanciera (SIIF) desarrollado en plataforma de arquitectura abierta operandodesde enero de 1995, el mismo que ha permitido la elaboraci6n de EstadosFinancieros de las gestiones 1995 y 1996. De la misma manera, entre 1996 y1997 se ha adecuado este sistema, para su implantaci6n en seis de las nueveprefecturas departamentales, habi6ndose alcanzado logros satisfactorios, talescomo la emisi6n de Estados Financieros y la obtenci6n de informaci6nfinanciera confiable y oportuna para la operativa de las instituciones. Se hanrealizado pruebas para la implementaci6n de la Red Metropolitana quepermitira, en un pr6ximo futuro, contar con las facilidades de la consulta deoperaciones financieras y la transferencia electr6nica de fondos y se ha dadopasos importantes para la conexi6n nacional a traves de una red de areaamplia.

La Contadurfa General del Estado cuenta con informaci6n deaproximadamente siete mil cuentas corrientes fiscales, aspecto que le permiterealizar un seguimiento al movimiento de las mismas y enriquecer lainformaci6n procesada. Dentro de este m6dulo se cuenta con la informaci6n delos recursos de Participaci6n Popular.

El proyecto ha asesorado y apoyado al Ministerio en la adquisici6n de equiposde computaci6n para las diferentes subsecretarias involucradas con el sistemade administraci6n financiera.

La subsecretaria de Presupuestos (Viceministerio de Presupuesto yContaduria) ha desarrollado un software para la formulaci6n, agregaci6n yconsolidaci6n del Presupuesto General de la Naci6n, dicho sistema sedesarroll6 en base al sistema LEXUS, desarrollado por el proyecto. Losproductos de este sistema son el insumo para la operaci6n del SIIF.

4

A agosto de 1997, se ha logrado completar la normativa basica de los sistemasestablecidos en ia Ley 1178.

Con el apoyo de consultores internacionales y funcionarios de la instituci6n, laContraloria General ha desarrollado manuales y guias especializadas en lasareas de auditoria interna y externa.

A trav6s de la creaci6n de la Subcontraloria de Servicios Legales, laContralorfa General ha mejorado su capacidad para administrar los asuntosjuridicos. Dentro de los logros de esta unidad, se puede mencionar, entreotros, las Reformas al reglamento de las principales atribuciones yresponsabilidades de la C.G.R., el Proyecto de Ley de Procedimiento CoactivoFiscal y el Reglamento para el Seguimiento de Acciones para la Determinaci6nde Responsabilidad.

Se ha modernizado el parque computacional de la Contraloria con laadquisici6n de nuevos equipos de computaci6n.

El Centro de Capacitaci6n de ia Contraloria (CENCAP) ha dictado cursosregulares y especiales sobre la Ley 1178, ha realizado talleres y seminariosdel Sistema de Administraci6n Financiera y Control Gubernamentales y hacapacitado internamente a funcionarios de la CGE en el area de auditoria.

Se ha modernizado la Biblioteca de la Contraloria, actualmente se cuenta concerca de 4.000 documentos, entre libros, documentos de consulta, revistas yotros.

Se ha habilitado una Guarderia para ia atenci6n de los hijos de losfuncionarios.

Se han adquirido vehiculos para apoyar la labor de control en los municipios.

Ill. Factores que afectaron la ejecucion del Proyecto

A partir de agosto de 1993, se inicia la gesti6n presidencial del Lic. GonzaloSanchez de Lozada, que se caracteriz6 por los grandes cambios estructuralesdel Estado, aspecto que repercuti6 en la ejecuci6n del Proyecto, tanto por loscambios en la estructura del Estado como tambien debido a que la magnitudde estos disminuy6 la importancia que se le dio a la implantacion de la Ley1178.

El primer cambio se dio en septiembre de 1993, cuando se aprueba ia Ley deMinisterios que organiza al Poder Ejecutivo en funci6n al Plan de Gobierno, suimpacto en el Proyecto ILACO se refleja en la modificaci6n del CONSAFCO, yaque el Ministerio de Finanzas se convierte en Secretaria Nacional deHacienda, dependiente del Ministerio de Desarrollo Econ6mico, instancia a lacual se delega la rectoria de los sistemas de administraci6n financiera y se

5

elimina de la estructura al Ministerio de Planeamiento y Coordinaci6n, 6rganorector del Sistema Nacional de Planificaci6n, cuyo titular formaba parte delConsejo.

En abril de 1994 se aprueba la Ley de Participaci6n Popular que persigue unamejor distribuci6n de los recursos publicos, estableciendo el principio dedistribuci6n igualitaria por habitante, de los recursos de coparticipaci6ntributaria, para lo cual se establece un reordenamiento territorial ampliando lascompetencias municipales al ambito rural, asignando a los gobiernosmunicipales la responsabilidad en la administraci6n, tanto de los recursoscomo de la infraestructura de educaci6n, salud, deportes, caminos vecinales,microriego. Con esta Ley el numero de Municipios se incrementa a 311 y seclasifican en Municipios de acuerdo al numero de habitantes en cinco tipos deMunicipios.

La Ley de Descentralizaci6n Administrativa de 28 de julio de 1995 establece laestructura organizativa del Poder Ejecutivo a nivel Departamental en aras de,entre otros objetivos, mejorar y fortalecer la eficiencia y eficacia de laAdministraci6n Publica, en la prestaci6n de servicios en forma directa ycercana. Mediante esta Ley se disuelven tanto las entidades descentralizadasy desconcentradas, como las Corporaciones Regionales de Desarrollo y susfunciones y responsabilidades son delegadas a los PrefectosDepartamentales, transfiriendo tambi6n la responsabilidad de la administraci6nde los recursos humanos, fisicos y financieros. Con esta reforma se reduce elnumero de entidades a las cuales deberfa alcanzar el proyecto con eldesarrollo e implantaci6n de los sistemas de administraci6n financiera; sinembargo, esta reducci6n en el numero viene acompahada con modificacionesen el funcionamiento y relacionamiento del aparato estatal.

El aho 1997 se produce el cambio de administraci6n del Poder Ejecutivo y seinicia nuevamente un proceso de cambio en aspectos organizativos del mismo,el 22 de septiembre de ese an-o se aprueba la Ley de Organizaci6n del PoderEjecutivo, disposici6n que modifica nuevamente la estructura y funciones delos Ministerios, crea los Servicios Nacionales y, modifica tambi6n algunosaspectos de la Ley de Descentralizaci6n Administrativa relativos a lasresponsabilidades de los Prefectos. Entre los cambios importantes dentro deestructura del Ministerio de Hacienda, esta la fusi6n de las Subsecretarfas dePresupuesto y Contaduria General del Estado en un solo Vice Ministerio dePresupuesto y Contaduria.

Aparte de los cambios en la estructura del Estado, se debe considerar loscambios en autoridades tanto del gobierno como del proyecto en si. Desde elinicio del proyecto, el ano 1991, hasta la fecha se produjeron los siguientescambios:

Tres diferentes gobiernos constitucionales, en el Ministerio de Finanzas(Secretaria Nacional de Hacienda, Ministerio de Hacienda), 6 Ministros, 3Secretarios Nacionales, 7 Contadores Generales del Estado (Vice Ministerio

6

de Presupuesto y Contaduria), 8 Subsecretarios de Presupuesto (ViceMinisterio de Presupuesto y Contadurfa), 7 Subsecretarios de Tesoro y Cr6ditoPublico (Vice Ministerio Tesoro y Cr6dito Publico); en la Direcci6n T6cnica delProyecto 6 Directores T6cnicos.

Por otro lado, en abril de 1995, el Gobierno de Bolivia solicit6 la separaci6n enla administraci6n de los recursos del proyecto, encomendandose al Unidad deGesti6n PCiblica (UGP), dependiente del Ministerio de Hacienda laadministraci6n de los recursos correspondientes a Haciendat (la UGP, fuedisuelta posteriormente y la administraci6n continua a cargo de la Unidad delProyecto) y a la Contraloria General de la Republica, los recursos de esaInstituci6n.

Adicionalmente, el CONSAFCO tambi6n tuvo algunas modific:aciones en suestructura y funciones, se incluye al Contador General del Estado, alSubsecretario de Inversi6n Publica y al Director del Centro de Capacitaci6n; elMinisterio de Planeamiento fue eliminado de la estructura del Poder Ejecutivo,por lo tanto no tiene representaci6n en el Consejo; se incluye alSuperintendente de Bancos y por ultimo el Consejo se reduce al Ministro deHacienda y el Contralor General del Estado, limitando en esta ultimaoportunidad, sus competencias a considerair y aprobar los EstadosFinancieros, designar la firma auditora para el proyecto, aprobar la liquidaci6ndel proyecto y, requerir informes sobre el cumplirmiento del programa operativo.

En lo que se refiere a la conducci6n del proyecto, a partir de 1996, la Direcci6nT6cnica reasume su rol en sentido de tomar a su cargo la responsabilidad porla ejecuci6n t6cnica del mismo. Esta situaci6n obedece a que hasta fines de1995, el proyecto actuaba practicamente como un administrador de recursosfinancieros y la conducci6n t6cnica obedecia a las decisiones de losSubsecretarios de area, aspecto que dificult6 la coordinaci6n efectiva entre lossistemas. Es a partir de esta nueva administraci6n, que se conisidera la masproductiva del proyecto, que se han logrado avances significativos en cuantoal desarrollo normativo y la implantaci6n de los sistemas de la Ley 1178.

Esta permanente rotaci6n de autoridades y ejecutivos del proyecto no permiti6el desarrollo continuo del proyecto ya que los diferentes enfoques afectaron eldesenvolvimiento del mismo. Pese a esta situaci6n, se considera que elcumplimiento de los principales objetivos son satisfactorios al Gobierno.

Ill. Sostenibilidad

La sostenibilidad de los logros alcanzados con el PFMO I y el PFMO II, estanintimamente relacionados con la sostenibilidad de la Ley 1178 en si, por lotanto, los siguientes factores son considerados criticos:

Conocimiento del Sistema Integrado de Administraci6n Financiera por partede las autoridades: el desconocimiento total a parcial de los beneficios dela Ley 1178 acarrean dispersi6n de los esfuerzos y falta de continuidad enel proceso de cambio;

7

* Voluntad politica: se requiere el total apoyo del Poder Ejecutivo para lograruna implantaci6n de los sistemas de administraci6n financiera;

* Compromiso a largo plazo: la voluntad politica, aunada a disponibilidad derecursos financieros debe mantenerse a lo largo del tiempo que dure elproceso de implantaci6n de los sistemas de administraci6n financiera;

* Continuidad: es indispensable la continuidad en la direcci6n tecnica acargo de los sistemas, de manera que los esfuerzos sean orientados en unsolo sentido. En este aspecto debe considerarse seriamente la continuidaden la tecnologia que se ha desarrollado a la fecha;

* Difusi6n y Capacitaci6n continua: los 6rganos rectores deben realizar unadifusi6n permanente acerca de los avances que se realizan en materia deimplantaci6n de sistemas y los beneficios que esto significa para el pa[s.

Lo que queda por hacer

Si bien hasta la fecha se ha logrado la implantaci6n del Sistema Integrado deInformaci6n Financiera en la Administraci6n Central y gran parte de laAdministraci6n Regional, queda pendiente su implantaci6n en el ambito de losgobiernos municipales y entidades descentralizadas.

En el ambito de la Administraci6n Central se debe todavia realizar lacomunicaci6n electr6nica, tanto para la transferencia de informaci6n, como latransferencia electr6nica de solicitudes de pagos y pagos. En cuanto a laimplantaci6n misma de los sistemas establecidos en la Ley 1178, deberealizarse un esfuerzo comunicacional y de capacitaci6n para dar a conocer elmodelo de administracion financiera y lograr su institucionalizaci6n.

De manera especifica, se debe realizar la transferencia tecnol6gica del SIIF alpersonal del 6rgano rector para dar continuidad en su explotaci6n y evitar ladependencia de agentes externos. Debe tomarse en cuenta que el sistemacomputacional en su explotaci6n futura ha de requerir modificaciones y ajustespropios de todo sistema. Si bien en la actualidad el proyecto se encuentra enproceso de entrega del sistema, aun no se cuenta con el personal profesionalcapacitado y con la formaci6n y experiencia requeridas.

El proceso de desarrollo del SIIF para las prefecturas departamentales es aunbasico, es decir que queda pendiente el desarrollo e implantaci6n de m6dulosadicionales que enriqueceran su desempeno.

Los gobiernos municipales de mayor tamaho aun no cuentan con unaherramienta computacional de contabilidad integrada, por lo tanto un esfuerzoen ese sentido deber ser considerado en un plazo no muy lejano.

La emisi6n tardia de la normativa de los sistemas de administraci6n financieraha relegado la Ley 1178, para evitar su total aplazamiento, el gobierno deBolivia debe hacer un gran esfuerzo en aras del cumplimiento de los preceptosde la Ley 1178. En este sentido, debe considerarse una difusi6n masiva de lafilosofia, el enfoque sist6mico y la normativa basica de los sistemas, tanto en el

8

ambito gubernamental, como de la opini6n publica en general.

IV. Desempeffo del Banco

El desempeno del Banco puede ser calificado como altamente satisfactoriotanto en la etapa de identificaci6n, como en la ejecuci6n clel mismo. Laparticipaci6n de las misiones del Banco permiti6 el continuo ajuste a losobjetivos ocasionados por la dinamica de los cambios estructurales yadministrativos y prest6 un apoyo excepcional tanto en aspectos tecnicoscomo estrat6gicos durante la ejecuci6n del proyecto.

V. Desempefio del Prestatario

La participaci6n del gobierno en la ejecuci6n del proyecto fue satisfactoria porel compromiso de Ilevar adelante los objetivos del proyecto. La irnplantaci6n delos sistemas de la Ley 1178, es aun una prioridad del Gobierno, hasta Ilegar asu institucionalizaci6n en los diferentes niveles del sector publico.

VI. Resultados

Si bien el proyecto no alcanz6 la totalidad ije resultados originalmenteplanteados, se considera que los resultados que se alcanzaron sonsatisfactorios ya que con las herramientas computacionales desarrolladas enel proyecto, el gobierno, en un plazo no muy lejano, podr-a contar coninformacion oportuna de un gran porcentaje de instituciones financiadas conrecursos del Tesoro General de la Naci6n. Por otro lado, con la aprobaci6n dela totalidad de las normas basicas de los sistemas; de administraci6n financiera(incluyendo los sistemas de Planificacion e Inversi6n P1ublica), el Estadoboliviano esta orientando sus acciones al ordenamiento en la administraci6nde los recursos publicos, aspecto que permitira una mejor asignaci6n de losmismos.

Los principales beneficios logrados y que representan avances hacia lainstitucionalizaci6n de un sistema de administraci6n financiera en el sectorpublico son:• El SIIF implantado en la Administraci6n Central es una herrarmienta con tres

ahos de explotaci6n, habiendo mostrado su capacidad para sostener laoperativa del TGN, contando con una informaci6n oportuna y de mayorconfiabilidad;

* Con la adecuaci6n e implantaci6n del SIIF en seis de las nueve prefecturasdepartamentales, se ha demostrado la versatilidad del sistema y tambien seha Ilevado a cabo un gran avance en aras de implantar un solo sistema enel sector p6blico;

• El exito obtenido en el proyecto piloto de comunicacion electr6nicapermitira, en pr6ximo futuro la conexi6n de las enticiades de laAdministraci6n Central en tiempo real, no s6lo con fines cle captura deinformaci6n financiera, sino tambien para la transferencia electronica derecursos. Esta ultima ventaja estara tambi6n disponible para el ambito

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descentralizado y departamental.La normativa de los sistemas de administraci6n financiera permitira unordenamiento sist6mico y uniforme en el uso de los recursos del estado enaras de lograr la eficacia y eficiencia y la transparencia.

VIl. Operaci6n Futura

El Gobierno de Bolivia ha firmado un contrato para la Tercera Fase delproyecto, bajo la denominaci6n de "Proyecto de Descentralizaci6n Financiera yRespondabilidad (Accountability)". Con esta tercera fase se tiene previstoimplantar el SIIF en las nueve prefecturas departamentales, diez municipiosrepresentativos y en doce entidades descentralizadas aut6nomas. El sistema aser implantado comprende ademas m6dulos para activos fijos, almacenes,personal y adquisiciones, de esta manera, el sistema estarfa institucionalizadoen un grupo de instituciones que representaria, aproximadamente, el 90% delos recursos del Presupuesto General de la Naci6n. Esta implantaci6n incluyeademas, la difusion de los sistemas de la Ley 1178.

VIII. Principales Lecciones Aprendidas

Las principales lecciones aprendidas durante la ejecuci6n del Proyecto ILACOpueden ser enumeradas de la siguiente manera:- Con una adecuada conducci6n tecnica y el apoyo de las autoridades, se

puede lograr mayor eficiencia y eficacia en el cumplimiento de objetivos* La poca injerencia politica en proyectos de esta naturaleza permite la

continuidad en la conducci6n t6cnica requerida para el cumplimiento deobjetivos

* La coordinaci6n entre las diferentes areas involucradas en laAdministraci6n Financiera realizadas a trav6s de profesionales altamentecapacitados ha conseguido una mayor comprensi6n de los sistemas y laparticipaci6n de un mayor numero de usuarios capacitados

* La alta rotaci6n de funcionarios del sector publico es todavia un obstaculoque impide la institucionalizaci6n de los sistemas, este factor se refieretanto a personal t6cnico como autoridades

* Los bajos salarios que se pagan en el sector publico constituyen unobstaculo en la contrataci6n de profesionales capacitados